THE IMPACT OF PRIVATE FINANCING OF HEALTH CARE SYSTEM IN NIGERIA
LITERATURE REVIEW
Introduction
This chapter reviews earlier works or literature related to the private sector, health care and financial services delivery. Literature was also reviewed on the type of health financial services private institutions provide, how these private institutions provide health financial services, the category of people the institutions provide financial services to, financial services provision within the national health policy and the challenges and prospects of private health institutions in health financial services delivery. The chapter also discusses case studies on the role of private sector in health financial services provision in other countries to draw best practices and challenges from those countries. Finally, a conceptual framework that guides the study is discussed.
The Concept of Private Sector
For many, the term private sector conjure up the image of a business engaged in commerce or manufacturing. However, an analysis of the characteristics of the term private sector leads to deeper understanding of the nature and coverage of the term (OECD, 2004).
The Private Sector, according to the Development Assistance Committee (DAC) of the Organisation for Economic Co-operation and Development is „a basic organising principle of economic activity where private ownership is an important factor, where markets and competition drive production and where private initiative and risk taking set activities in motion‟ (OECD, 2004:17). The critical point is that, markets, through the process of competition, determines what is produced and consumed. This distinguishes market-based economies from other organising principles. The term private sector, therefore, covers all private actors such as; the poor and the rich, individuals and businesses who are engaged in risk taking to earn profits and incomes. It applies to the smallholder farmer as well as to the very large, multinational corporation (OECD, 2004).
The world over, the private sector is the major contributor to Gross Domestic Product (GDP) and employment and so is the engine of the economy (OECD, 2004:
8). Growth, as measured by increases in GDP, is simply the sum of the increase in value added by the activities of all participants engaged in production and market exchange. The greater the capability of private actors, including the poor, to add value and create wealth, the faster will be the pace of growth.
Current thinking for the provision of public infrastructure and financial services is that the private sector should be encouraged to participate in the performance of functions which have been traditionally reserved to the public service including the provision of public infrastructure and financial services. This trend has gained increased acceptance in both the developed and developing world (GoG, 2000).
The term Private Sector refers to all those health providers working outside the direct control of the state and include; both for-profit and not-for-profit providers, and formally trained providers as well as traditional healers (Obuobi et al., 1999).
Health
Health according to paragraph two of the preamble of the constitution of World Health Organization is a state of complete physical, mental and social well-being and not merely the absence of disease or infirmity (WHO, 1948).
Health is the extent to which an individual or a group is able to realize aspirations and satisfy needs, and to change or cope with the environment. Health is a resource for everyday life, not the objective of living; it is a positive concept, emphasizing social and personal resources as well as physical capabilities (WHO, 1984).
Health is a state characterized by anatomic, physiologic and psychological integrity; ability to perform personally valued family, work and community roles; ability to deal with physical, biological, psychological and social stress a feeling of well-being; and freedom from the risk of disease and untimely death (Stokes et al. 1982 in WHO, 2007).
Health is a state of equilibrium between humans and the physical, biological and social environment, compatible with full functional activity (Appleton and Lange, 1997 in WHO, 2007).
People do not think about health only in terms of sickness or injury, but also in terms of what they perceive as endangering their health and that of their community (WHR, 2008).
According to Amofah (2000), health can be viewed in three different epidemiological paradigms; the traditional medical paradigm that is centered on an organic perspective which views health in terms of the presence or absence of signs and symptoms of disease in individuals with treatment directed at removing the immediate cause(s) of the signs and symptoms of the disease in the individual in a fixed health facility with the hope that he/she will be healthy. The social paradigm expanded the medical model by recognising that diseases have a social dimension placing a lot of emphasis on improving the environment (especially the physical, biological and social environment) with programmes such as water treatment, sanitation improvement, vector control and control of industrial pollution undertaken with the hope that people will be healthy. The socialist paradigm recognises that the determinants of health/ ill health are primarily to be found in the socio-economic and political environment in which people live placing focus on broad socio-economic development to improve upon the health status of the people in the community.
Health is a relative state in which one is able to function well physically, mentally, socially, and spiritually in order to express the full range of one's unique potentialities within the environment in which one is living. In the words of René Dubos, “health is primarily a measure of each person's ability to do and become what he wants to become” (Medical Dictionary, 2012).
For the purpose of this study, health is defined as one‟s ability to live and function as a complete physical, mental and social being and able to perform his or her natural, biological or reproductive, productive, societal, political or democratic and religious roles.
Health Care
According to the American Heritage Medical Dictionary (AHMD, 2007) health care is the prevention, treatment, and management of illness and the preservation of mental and physical well-being through the financial services offered by the medical and allied health professions. It is also the financial services rendered by members of the health professions for the benefit of a patient.
In the United States, the spectrum of health care has been defined by the Department of Health and Human Financial services as encompassing six levels of health care; primary, secondary, tertiary, respite, restorative and continuing care. The first level of care is preventive care, which is primarily provided by school health education courses and community and public health financial services (AHMD, 2007).
Primary care is the usual point at which an individual enters the health care system. Its major task is the early detection and prevention of disease and education on healthy life style. This level of care also encompasses the routine care of individuals with common health problems and chronic illnesses that can be managed in the home or through periodic visits to an outpatient facility. Providers of care at the primary level include family members as well as the professionals and paraprofessionals who staff community and neighborhood health centers, hospital outpatient departments, physicians' offices, industrial health units, and school and college health units (AHMD, 2007).
Secondary or acute care is concerned with emergency treatment and critical care involving intense and elaborate measures for the diagnosis and treatment of a specified range of illness or pathology. Entry into the system at this level is either by direct admission to a health care facility or by referral. Provider groups for secondary care include both acute- and long-term care hospitals and their staffs (AHMD, 2007).
Tertiary care includes highly technical financial services for the treatment of individuals and families with complex or complicated health needs. Providers of tertiary care are health professionals who are specialists in a particular clinical area and are competent to work in such specialty agencies as psychiatric hospitals and clinics, chronic disease centers, and the highly specialized units of general hospitals; for example, a coronary care unit. Entry into the health care system at this level is gained by referral from either the primary or secondary level (AHMD, 2007).
Respite care is that provided by an agency or institution for long-term care patients on a short-term basis to give the primary caretaker(s) at home a period of relief (AHMD, 2007).
Restorative care comprises routine follow-up care and rehabilitation in such facilities as nursing homes, halfway houses, inpatient facilities for alcohol and drug abusers, and in the homes of patients served by home health care units of hospitals or community-based agencies (AHMD, 2007).
Continuing care is provided on an ongoing basis to support those persons who are physically or mentally handicapped, elderly and suffering from a chronic and incapacitating illness, mentally retarded, or otherwise unable to cope unassisted with daily living. Such care is available in personal care homes, domiciliary homes, inpatient health facilities, nursing homes, geriatric day care centers, and various other types of facilities
2.6 Type of Health Financial services Provided by Private Institutions
Private-sector providers are a mix of the formal, such as doctors, pharmacists and chemical sellers, and non-governmental organizations (NGOs), and the informal, such as herbalists and traditional birth attendants (TBAs) (Obuobi, et al. 1999 and MOH, 2007). Private medical practitioners provide diagnostic and therapeutic financial services such as general, surgical, obstetrics/gynecological, ENT, dental, orthopedics, other specialties. Beside, these private health providers offer basic health financial services such as curative care, minor surgery, antenatal care, post-natal care, deliveries, major surgery, physiotherapy and laboratory service among others (Obuobi et al. 1999).
According to the World Health Organization (WHO), health financial services, be they promotion, prevention, treatment or rehabilitation, may be delivered in the home, the community, the workplace, or in health facilities effectively depending on the availability of motivated staff, equipment, information, finance, and adequate drugs (WHO, 2008). Health financial services are delivered through health systems which form the sum total of all the organizations, institutions and resources whose primary purpose is to improve health. This can be viewed in the form of a system‟s perspective, with inputs, processes, outputs, and outcomes.
A study by (Obuobi, et. al 1999) indicated that all socio-economic groups, males and females, various age groups, residents and non-residents, educated and non-educated, low, medium and high income earners all patronize private health care service provided by Private providers. Another study in Sub-Saharan Africa indicates that Private sector cares for people from a wide distribution of incomes, including poor and rural populations. In Ethiopia, Kenya, Nigeria, and Uganda, more than 40 percent of people in the lowest economic quintile receive health care from private, for-profit providers (IFC, 2005).
2.7. National Health Policy Guideline for Health service delivery in Nigeria
The Nigeria National Health Policy is designed within the context of achieving a middle income status by 2015, placing health at the centre of socio-economic development and presenting a clear shift in the role of health in the national and international development framework based on the recognition that health is not only a human right issue but also a key driver of development, and ultimately of wealth creation (MOH, 2007). The theme of the health policy is “creating wealth through health” as demonstrated Millennium declaration, the Nigeria Growth and Poverty Reduction Strategy, the Nigeria Macroeconomics and Health Initiative Report 2005 and various health sector policies and strategies. The Policy brings to bear the benefit Nigeria would derive from greater investment in health and nutrition and the critical role that healthy lifestyle, a healthy enhancing environment, a vibrant health industry and other sectors beyond health care service play in improving health and socio- economic development.
The policy focuses on the promotion of healthy lifestyle through good nutrition, regular exercise, recreation, rest and personal hygiene. It further places healthy lifestyle within the context of the physical and social environment where people live, go to school and work emphasizing potable water, sanitation, andsafe food, housing and road, as means of promoting good health and prevention of diseases and injuries.
The policy seeks to build a pluralistic health service that recognizes allopathic, traditional and alternative providers (both private and public) ensuring access to quality health intervention for preventing diseases and injuries, as well as for restoring the health of the sick and disabled. It aims to provide comprehensive health care financial services comprising preventive, curative and rehabilitative financial services. Finally, the policy seeks to promote a vibrant local health industry that supports effective, efficient, and sustainable service delivery, creates jobs and contributes directly to wealth creation and attainment of national development objectives.
The policy provides broad guidelines for the development of programmes by key stakeholders namely Government, other Ministries Departments and Agencies (MDAs), local authorities, such as district assemblies, the private sector, civil society organizations as well communities and traditional leaders. It also intends to guide health enhancing actions of individuals, households and communities and corporate entities as a tool for government.
According to the National Health Policy, health service providers in the public and private sectors as well the formal and informal sectors play key roles in delivering high quality financial services and being responsive to the needs of their patients and client. Currently, 65 percent of the Nigeriaian population use traditional and alternative medical care. However, health providers in both the formal and informal are not regulated or fully integrated into the existing health delivery system (MOH, 2007).
ARGUMENTS FOR AND AGAINST PRIVATE SECTOR INVOLVEMENT IN HEALTH CARE DELIVERY
The world over, the private sector is the major contributor to GDP and employment and so is the engine of the economy. GDP is simply the sum of the increase in value added by the activities of all participants engaged in production and market exchange. The greater the capability of private actors, including the poor, to add value and create wealth, the faster will be the pace of growth (OECD, 2004).
The private sector plays a significant role in delivering health care to people in developing countries. By some estimates, more than half of all health care to the poorest people is provided by private doctors, other health workers, drug sellers, and other non-state actors. This reality creates problems and potential. By and large, developing-country health policy and donor-supported health programs fail to address the problems, or capture the potential of the private sector in health. Interest is growing, within the donor community and among policymakers in developing- country governments, to find ways to work with the private sector to accelerate progress toward high-priority health objectives. However, governments in many low and middle-income countries lack the essential skills and tools (for example, public- private partnership guidelines) to do this effectively. Recognizing this constraint to health system development, the Center for Global Development (CGD) convened a working group to design a practical way for donors and technical agencies to support successful public-private interactions.
Governments of developing countries have much to gain by engaging the private health sector. Some of the gains include the following; the private sector already plays a large role in health care in Africa serving nearly 50 percent of those who seek care outside the home (CGD, 2009). Also patients in developing countries prefer the private sector because they respond more to patients‟ needs, the private sector fills important gaps in health financial services and products to those underserved by the public sector, in many developing countries, the private sector owns and manages 40 to 50 percent or more of the country‟s health infrastructure and it is often the primary employer of health care professionals (CGD, 2009). Many of these financial services are located in remote and rural areas. The public sector can extend its reach by contracting these providers or by undertaking quality-enhancing activities such as accreditation. Public health financial services in developing countries often benefit better-off people more than the poor. Policy interventions, such as vouchers or insurance premium subsidies for poor people, can preferentially expand access for poor people to high-priority financial services or products (CGD, 2009).
Enabling policy changes can motivate increased manufacturing, distribution, and retail of high-priority health products. In many countries, excessive and poorly designed regulatory and tax policies discourage investment in important subsectors. Strategic policy changes (for example, changing entry regulations or tax provisions) can provide incentives for expansion in these subsectors and increase access to and use of important health goods, including bed nets, diagnostic tests, medical equipment, and pharmaceuticals.
Private-sector investment and growth often requires public sector links to reach people in lower-income households or underserved areas. Without contracting or insurance arrangements, or subsidies for poorer patients, much growth of the commercial private sector will occur in the subsectors primarily serving the better off portions of the population (for example, urban hospitals) (CGD,2009).
Challenges and Prospects of Private Health Institutions in Health Financial services Delivery
It has been noted that, in Sub-Saharan Africa, because the private sector is diverse and fragmented, service quality can be inconsistent and sometimes poor even when intentions are good. Also the lack of accreditation, the existence of a largely uninformed (in some cases illiterate) population, has created an environment in which an unscrupulous minority can sometimes prevail over responsible providers.
Others are the pursuit of excessive profits leading to unethical business practices such as under or over-servicing, collusion, false billing, price gouging, and unlicensed practice, private health care providers sometimes fail to deliver an appropriate level of care and the existence of substandard drugs (often resulting from small, sub-scale manufacturers without the skills, processes, and technologies required to produce to a higher standard) and counterfeit drugs (often linked to organized crime).
According to the Ministry of health (2007), health care quality in Nigeria is bedeviled with challenges such as; users routinely complaining of abusive and humiliating treatment by health providers. Long waiting time, high cost of care and illegal charges are commonly cited as reasons for dissatisfaction with public sector financial services. They have limited avenues to seek redress. Shortage of equipment, consumable supplies and some essential drugs undermines facility functioning, damages reputation, inflates out-of-pocket costs to patients and fuels a spiral of distrust and alienation. In many health facilities, standard managerial practices that ensure effective use of (limited) resources are not universally practiced.
Poor coordination between different parts of the health care delivery system (even in the same health facility) continues to be a major hindrance to efficient service delivery and poses inconvenience to clients as they shuttle between different departments and referral systems. Weakness or non-existent in many districts and within health facilities, compounds the poor coordination between different levels of care and within facilities and further compromise care of seriously ill patient.
Case Study of Successful Private Sector Programmes
Private Health Financial services for the Poor in India
Policy Background of India’s Health Policy
A 1983 National Health Policy of India gave a general exposition of the policies which required recommendation in the circumstances then prevailing in the health sector. Following changing circumstances relating to the health sector of the country since 1983, a new policy framework National Health Policy (NHP) was formulated in 2002. The NHP of 2002 set out a new policy framework for the accelerated
achievement of health goals in the socioeconomic circumstances prevailing in India at the time.
Policy Objectives
The main objective of the policy was to achieve an acceptable standard of good health amongst the general population of the India through increased access to the decentralized health system by establishing new infrastructure in deficient areas, and by upgrading the infrastructure in the existing institutions with priority given to ensuring a more equitable access to health financial services across the social and geographical expanse of the country.
The policy sought to enhance the contribution of the private sector in providing health financial services particularly for the population group which can afford to pay for financial services giving primacy to preventive and first-line curative initiatives at the primary health level through increased sectoral share of allocation among others.
The 2002 NHP endeavoured among other goals to eradicate Polio and Yaws by 2005, eliminate Leprosy by 2005, eliminate Kala Azar by 2010, eliminate Lymphatic Filariasis by 2015, achieve Zero level growth of HIV/AIDS by 2007, reduce Mortality by 50 percent on account of TB, Malaria and other vector and Water Borne diseases by 2010, reduce prevalence of blindness to 0.5 percent by 2010 and reduce IMR to 30/1000 and MMR to 100/Lakh by 2010.
The Policy welcomed the participation of the private sector in all areas of health activities such as primary, secondary or tertiary with a substantial contribution of the private sector in the urban primary and tertiary sectors, and moderate in the secondary sector. The Policy encouraged the setting up of private insurance instruments for increasing the scope of the coverage of the secondary and tertiary sector under private health insurance packages (MHFW, 2002).
Growth of the Private Sector in India
A study by Radwan (2005) on Private Health Financial services for the Poor in India revealed that, at Independence, less than eight percent of all medical institutions in the country were maintained by wholly private agencies. The private sector emerged in response to the fact that, the poor in India are disproportionately affected by disease and have limited access to adequate, medical financial services, high illiteracy rates, limited access to safe water, poor sanitation and the inability of the public sector to reach the poor or those in remote areas all contributing to the terrible state of health in which many of the poor live. Similarly, by 1996 the private sector accounted for 54 percent of rural hospitalization and 70 percent of urban hospitalization (National Sample Survey 1995/96 in Radwan, 2005).
Structure of India’s Private Health Sector
India‟s private sector is a broad group that includes; for-profit and not-for-profit providers, nongovernmental organizations (NGOs), missionary hospitals, private pharmacies, and blood banks plus unqualified informal providers, some of whom are registered and others not categorized in the following three components; Rural medical providers (RMPs), Not-for-profit (NFP) sector, including NGOs and religious-based facilities and Corporate, or for-profit, sector (Radwan, 2005).
Use of the Private Sector in India
The private sector provides the majority of health care in India for both outpatients (more than 80 percent) and inpatients (close to 60 percent) especially in the poorest states, such as Bihar and Uttar Pradesh, where no effective alternatives to the private sector exist. In richer states, such as Punjab and Maharashtra, much of the population who can afford prefers private financial services. The majority of the population in rural areas use the financial services of unregulated and often unqualified medical practitioners, such as “Jhola Chap” doctors and faith healers. (Radwan, 2005). The private sector is increasingly involved in primary and even in preventive health care such as maternal and child care, institutional deliveries, antenatal care and immunization. (Matthews et. al 2001, in Radwan, 2005).
Challenges of Increased Private Sector Participation in India
Informal providers have low levels of education and poor record keeping skill making them not qualified to provide the type of financial services that almost all of them are offering, including prescribing and administering powerful drugs and injectable medicines. Overall, the private sector‟s biggest problem is that it is without any oversight or regulation resulting in duplication of facilities in urban centers, variable quality financial services in the absence of licensing or accreditation, corrupt practices, variable charges, and lack of integration with other health issues such as disease surveillance (Radwan, 2005).
Lessons learnt
From the above, the following lessons can be drawn.
1.The private sector caters for the health needs of the poor both in the Urban and Rural areas of India.
2.Private financial services are easily accessible and affordable in India.
3.The operation of the private sector without regulation could lead to duplication of facilities in urban centers, uneven quality financial services due to the absence of licensing and accreditation, corrupt practices, erratic charges, and lack of integration with public health issues such as disease surveillance.
Health care financing
In a study by McIntyre, (2010) of current private sector health care financing and provision in South Africa, private health care financial services are financed through private health insurance (called medical schemes) and through direct out-of-pocket (OOP) payments.
According to the study by McIntyre, financial services provided by the private sector in South Africa include: independent practitioners working in solo or group practice, pharmacists at retail pharmacies, specialist doctors, private hospitals employ nurses and other health professionals, ambulance financial services and Traditional healers with number of health professionals working in the private health sector difficult to determine.
About 15 percent of the South African‟s population are beneficiaries of medical schemes. Those covered by medical schemes mostly use private sector health financial services and those not covered use the financial services of private providers for out-patient financial services and pay for this on an OOP basis. Only 15 percent of the population use private sector hospitals, and about 32 percent of the population use outpatient financial services in the private sector.
According to the study, the private health sectors that involve the considerable capital investment in organizations that operate on a for-profit basis are: medical scheme administrators, private hospital groups and pharmaceutical companies (McIntyre, 2010).
The utmost challenge facing the private health sector in South Africa is the rapid increase in spending, particularly by medical schemes. Medical schemes operate on a
„pay as you go‟ basis, i.e. contribution revenue roughly approximates spending on health financial services, administration and related activities in any year. As spending increases, so do contributions.
Some of the factors contributing to the increases in expenditure include; increased spending on medicine, high cost financial services and fee increases in private hospitals, the ageing population, third party payments, and non-health care costs (McIntyre, 2010).
What happens in the private health sector in a particular country certainly impacts on that country‟s health sector (Tuohy et al, 2004 in McIntyre, 2010), as the South African context clearly illustrates. For example, in the 1990s when medical schemes were deregulated and open schemes were allowed to exclude high-risk individuals from membership and engage in risk rating, there was extensive „cream-skimming‟ resulting in the public health sector bearing the burden of caring for South Africans with the greatest risk of ill health.
One of the greatest challenges facing the South African health system is the relative sizes of the public and private sectors, in terms of the amount of resources (financial and human) and the population size served (McIntyre, 2010)
A range of regulations govern the private health sector in South Africa, but these are quite fragmented (contained in a myriad of different pieces of legislation and with different bodies responsible for regulation development and implementation) and sometimes contradictory.
The key focus of private health sector regulation in South Africa has been on protecting the public in relation to quality of health financial services and products (McIntyre et al, 2010).
There is currently considerable debate about the proposed introduction of national health insurance (NHI) in South Africa, which could have considerable implications for the private health sector. This has followed from the decision at the 2007 policy conference of the ruling African National Congress (ANC) to introduce a NHI.
In conclusion, serious challenges face the private health care sector in South Africa, not least of all very rapid increases in expenditure and, hence, contribution rates in medical schemes.
A range of factors underlying these trends, but these have not been addressed effectively either through government regulation or through action by the private health sector itself. These challenges impact on the overall health system, both in terms of its affordability and sustainability and in terms of the ability to achieve the income- and risk-cross-subsidies needed to achieve a universal system.
The experience of the private health sector in South Africa should be taken into account by policy-makers in other African countries when considering what role they envisage for the private health sector in their country context.
Lessons learnt
Some of the lessons that could be learnt from the Private sector involvement in funding and providing health financial services in South Africa are;
1.Apart from personal financing, private health sector could also be financed through schemes and direct payment by clients.
2.increased spending on medicine, high cost financial services and fee increases in private hospitals, the ageing population, third party payments, and non-health care costs are some of the factors contributing to the increases in expenditure in the private health sector
3.The activities of private health sector in one country impacts on the entire country‟s health sector and that of other surrounding countries.
4.Regulations controlling the development of private health sector in South Africa focus on protecting the public in relation to health financial services and product quality.